Skyrocketing gasoline prices — pushed to record highs because of Hurricane Katrina — could lead the U.S. into recession, economists fear.
It's time for President Bush to do now what candidate Bush said he would back in 2000 — use the bully pulpit of the presidency to lower gas prices. The nation's economy, still in post-9/11 recovery, cannot afford a major retraction.
Most Americans probably haven't determined the ramifications of skyrocketing gas prices — on their checkbooks, let alone on the national economy. It's up to the Bush Administration to take a proactive leadership role, before it's too late.
The AAA motor club reported Monday that the nationwide average for a gallon of gasoline was $3.05, although prices were much higher in most major metropolitan areas. That's roughly double where gas prices stood two years ago.
For a consumer filling up a 12-gallon tank twice a week, that's a price increase of about $36.50 per week, or roughly $1,900 per year. That's a hike many consumer cannot afford, which may explain why an estimated 70 percent of gas purchases are made with credit cards.
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Candidate Bush said that if he would bring down gasoline prices through sheer force of personality, by creating enough political good will with oil-producing nations that they would increase their supply of crude.
"I would work with our friends in OPEC to convince them to open up the spigot, to increase the supply," Bush told reporters at a June, 2000, campaign stop in Michigan. "Use the capital that my administration will earn, with the Kuwaitis or the Saudis, and convince them to open up the spigot. Ours is a nation that helped Kuwait and the Saudis, and you'd think we'd have the capital necessary to convince them to increase the crude supplies."
Candidate Bush suggested in 2000 that President Clinton "jawbone OPEC." It's advice he should take now.
But there is another step Bush should take — show some cahones, and call for a "summit" with oil and gas producers, many of whom have long-time ties to the Bush family.
In 2004, the nine largest integrated oil companies made $87 billion in profit, with Exxon Mobil alone making $25 billion, according to an August report by the Congressional Research Service.
This year, Exxon Mobil reported profits jumped 32 percent to $7.6 billion in the second quarter compared to the same period in 2004. BP saw a profit increase of about 30 percent, totaling $5.6 billion in the second quarter, while Conoco Phillips earned $3.1 billion, a 55 percent increase in profits in the second quarter compared to the same period in 2004.
Article comments
1 - SFC Ski
Many people discuss the supply of crude oil without mentioning that it also needs to be refined into gasoline. It seems to my inexpert view that the prices would be reduced if the was greater refining capability. Anyone have some real educated input for or against this?
2 - RedTard
Great post. Just for your useless knowledge file, the standard "barrel" of oil is equivalent to 42 gallons and refined makes 19 gallons of gasoline, 11 gallons of fuel oil, 4 gallons of jet fuel, and a few gallons of other product.
The underlying cost has only went up $1.00/gallon yet refined products have went up at least double that. I suspect there is at least 60-80 cents worth of additional company profit being added on each gallon compared to a few years ago.
3 - RedTard
Continue to fear and the government, both right and left, will continue to take away your rights in your "best interest".
4 - Dave Nalle
Wrong again, David. Bush should not do anything to push down oil prices. In fact, he should smack a good fat $1.00 tax per gallon on top of them, and allow each state to add another 50 cents of its own. That money can go to the deficit or rebuilding Louisiana, or to subsidize building some refineries to open up that bottleneck.
A high price for gas is what we need right now to get over the hump in the production and distribution of hybrid and altertnative fuel vehicles. They are out there, but the manufacturers need proof there's consumer demand for them so that they'll step up production, and skyrocketing gas prices - the higher the better - are exactly the motivation people need to demand these vehicles.
Dave
5 - David R. Mark
Dave, your suggestion would kill the economy.
I agree that hybrids and other alternative fuel vehicles should be pushed onto the market. The problem is that Bush has coddled the Big Three in Detroit -- every president does -- so once again, American automakers have fallen behind their foreign competitors.
Toyota has 10 hybrid models on the market. Honda also has several. Meanwhile, Bush has talked about having to study the issue (specifically hydrogen-powered cars) for several more years. And the Big Three have a limited number of hybrids available, and they aren't being pushed the way, say, the new Honda Accord hybrid is.
But pushing for hybrids and other alternative fuel vehicles and trying to be proactive about gas prices are not mutually exclusive things.
6 - JR
If high gas prices would kill the economy, then this economy needs to be replaced with a sustainable one. Might as well do that now, rather than stick a patch on it and put the fundamental problem off for later (like we did with Saddam Hussein and New Orleans).
7 - David R. Mark
I'm shocked at the responses. I mean, I expect people to disagree, but I (perhaps naively) thought that people would want Bush to stand up to OPEC and big oil companies.
Hmmm.
8 - Dave Nalle
>>But pushing for hybrids and other alternative fuel vehicles and trying to be proactive about gas prices are not mutually exclusive things.<<
The government can't make consumers want hybrids and alternative fuel vehicles the way that market pressure can. They already passed a consumer tax incentive equivalent to the increased cost of a hybrid over a non-hybrid. There's not much more they can do.
The problem right now is that none of the manufacturers are shipping enough alternative fuel and hybrid vehicles to their dealers. Everyone has a waiting list of months. Plus US manufacturers have great designs of their own, ready to be produced, but have been dragging their feet. Higher gas prices will also help spur the biodiesel industry, which is a vital part of the picture.
As for hurting the economy, so far the already high gas prices AND hurricane Katrina haven't done it. Did you see what the stock market did today?
Dave